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BRET STEPHENS:
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A short history of PA corruption

According to a recent study by the International Monetary Fund of Palestinian public finances, the President’s Office annually consumes eight percent, or $74 million, of the Palestinian Authority’s published budget. Of that sum, some $40 million is spent on wages; the rest is for Yasser Arafat to dispose as he pleases.

“This inevitably raises questions and suspicions which are inconsistent with accountable and transparent public finance systems,” writes Karim Nashashibi, the author of the study.

IMF technocrats are not the only ones calling attention to dubious PA finances. In August 2002, OC Intelligence Maj.-Gen. Aharon Ze’evi told the Knesset Foreign Affairs and Defense Committee that Arafat was worth an estimated $1.3 billion. Four months earlier, on April 5, IDF troops uncovered Arafat’s signature on a memo approving thousands of dollars for Tanzim militiamen later involved in suicide attacks.

Where does Arafat’s money come from? Arafat claims having made a fortune in construction with a Kuwaiti-based company in the late 1950s. The claim is almost certainly false. During its years in exile, the PLO was funded by the Soviet Union, by Arab states, and by a five percent tax on all Palestinian workers in Arab League countries.

But the PLO was not simply a charity. According to a 1993 report by the British National Criminal Intelligence Service, the PLO also maintained sidelines in “extortion, payoffs, illegal arms dealing, drug trafficking, money laundering and fraud,” all of which brought its estimated fortune to $14 billion.

At the time, the director of the PLO National Fund was a self-made millionaire named Jawid al-Ghussein. In 2000, four years after he left that post, Ghussein was abducted from a wedding in the United Arab Emirates by members of Arafat’s Force 17 and incarcerated for 16 months in Gaza, four of which were spent in isolation. Released in July 2002 for medical treatment in Israel, Ghussein fled to London with his family. He remains tight-lipped about PLO finances, but his son, Tawfiq, is less reticent.

“The authority’s conduct raises disturbing questions whether it can be trusted to be a responsible member of the international community,” he said at the time.

Since coming to Gaza in 1994, Arafat has treated the areas under his control as his personal fief. He doubled the size of the Palestinian civil service, creating a class of dependent clerks to whom he could bestow or withhold favors at whim. With money-man Muhammed Rashid, he established Al-Bahr, a holding company chaired by Suha Arafat, which exerts monopoly control over every significant concession in the Palestinian Authority: tobacco, cement, gasoline, the Jericho casino — some 27 companies in all.

Then there are Arafat’s slush funds. Composed largely of monies pilfered from the EU and Israeli transfer payments, the kitty is estimated to contain anywhere between $300 million (according to Forbes) to $4 billion (according to Rawya Shawa of the Palestinian Legislative Council), and is distributed across bank accounts in the Cayman Islands, Switzerland, North Africa and — at least in the late 1990s — at the Hashmonaim branch of Bank Leumi in Tel Aviv.

From time to time, attention has been called to the issue of Palestinian “corruption.” And from time to time, Arafat has gone through the pretense of reforming. In 1997, he commissioned an audit after it emerged that the PA had wasted more than a third of its annual budget.

“We are making significant, serious and very sincere efforts to keep that promise [to close slush funds],” Rashid declared at the time.

In 1999, following growing international dissatisfaction with the PA’s public finances, Salaam Fayad — then the IMF’s Resident Representative to the PA — established, with Arafat’s consent, the so-called Economic Policy Framework, which attempted to consolidate all PA funds into a single account. This initiative, too, went nowhere. In 2002, Fayad, now installed as the PA’s finance minister, attempted a “second wave” of reform, again with Arafat’s blessing. It remains to be seen where this will lead.

On the whole, Arafat has been willing to entertain external pressure for reform. Not so internal pressure. In 1999, Muawiya Al-Masri, a member of the PLC from Nablus, gave an interview to a Jordanian newspaper in which he denounced PA corruption. For his trouble, he was attacked by a gang of masked men and shot three times.

“No minister can appoint a driver or a delivery boy in his ministry without the president’s consent,” he said after the attack. “There is no institutional process. There is only one institution — the presidency, which has no law and order and is based on bribing top officials.”

That same year, Abdel Sattar Kassem, a political scientist also from Nablus, signed the Petition of the 20 — “to stand against this tyranny and corruption.” He was jailed for six months.

“I am fighting alone,” he told this reporter after his release. “Our people are not up to their historic responsibility to defend those who would defend their rights.”